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Tag Archives: Gene Sperling

Oh no. I knew that at the root of the failure of President Obama’s economic policies is a failure to understand fundamental economics.

You remember a few days ago when the Congressional Budget Office found that Obamacare will induce people to work fewer hours and quit their jobs because with the new benefit – basically a form of unearned salary from the government – it will be less sensible to work at all.

And so White House economic officials, who also have degrees in Spin Theory, took to the podium of the briefing room and the North Lawn of the White House to plow new economic ground – this could get them all the Nobel Prize – by declaring that disincentives to work are A GOOD THING!

You know, people now have “choices,” like they can stay at home and take care of children – while others who are supporting them work and ignore their children – or even somehow, though they couldn’t afford health care, scrape together enough money to start a business!

Well, you can only get to such illogical theories when you are having trouble with economics 101, as did White House National Economic Council Director the other day.

“I think that, you know, people are taught in Economics 101, that, you know, if price goes up, there must be a little less supply,” he said.

W w w w w w w w.

W w w w w w what? How do run the White House economics shop and even accidentally make such a mistake.

Below is a supply curve. It’s actually the second things you learn in Economics 101, after you learn the demand curve. It states that price goes up as supply goes up. That is, as demand increases, producers can make more stuff and charge more for it.

Here’s a supply curve.

As you can see, in the real world, outside the West Wing, the owners of Tony’s Pizzeria satisfy growing demand not by sweetly charging less, but by raising the price as much as they can possibly get away with it.

People will work harder – make more pizzas – for more money. But then, that’s a mystery to a White House that thinks, you didn’t build that.

Speaking of working harder for more money, Sperling also thinks that increasing the minimum wage will induce people to work less:

But they also know what it’s like to see a friend, a neighbor, where one spouse goes back to work, who would prefer maybe not to work. Maybe they’re working part-time just to supplement the family’s income. And they think, if that family member is making that sacrifice — spending less time with the child — then they should be making a decent living or be able to work less because they’re getting a decent wage.

Here’s the silliness capture by video cameras:

Wo wo wo wo woah.

Wo wo woah.

Higher wages are an incentive to work. Do these Obama folks have any idea how normal people’s brains work? The appetitive nature? The bedrock of economics?

This is something called called a labor supply curve. It shows that, at the lower level of wages we’re talking about at least, as wages increase, the amount of work performed rises.

Because if you pay people more they work more, not less.

Given the kind of thinking we’re hearing out of the White House, we can begin to understand why they believe open-ended government largesse is going to improve the economy.

Economics is at its heart about human nature. The White House doesn’t understand human nature. And so it doesn’t, whether its officials have PhD’s or not, understand economics either.

H/T to Dr. Tony Lima at Gonzoecon.com, who alerted me to Sperlings problems with the supply curve.

The White House is pushing aggressively – at least rhetorically – for an extension of expiring long-term unemployment benefits, but it does not appear the bill will emerge from the Senate, let alone the House, where it has virtually no chance, according to Politico.

“I hope a few reasonable and empathetic Republicans will join my colleague from Nevada, Sen. Heller, and help us advance this bill,” said Senate Majority Leader Harry Reid.

Sperling: Hmm, maybe we can pass this bill and help these poor people without calling any Republicans.

Well, demonizing Republicans sure will help round up votes, won’t it? But then again, maybe demonizing Republicans is the point.

“If Republicans block this renewal, I think it will have an effect on their chances for the 2014 elections,” said Sen. Chuck Schumer (D-N.Y.).

Oh, I see!

The $6.5 billion legislation is being brought to the floor without consideration in committee and without the possibility of amendment on the floor. That’s what’s called, in Washington, ramming it through. And the money is being supplied directly by the Chinese. That is, the bill includes no tax increases or spending cuts to pay for the extension.

Outgoing White House National Economic Council Director Gene Sperling gave one of his typically plaintive performances in the briefing room, lamenting, “today and tomorrow are the days that the 1.3 million Americans will find their temporary lifeline not in their mailbox.”

But Sperling said the White House might talk about how to pay for it only after it’s passed.

And, asked if he’d bothered to call any Republicans other than the bill’s GOP cosponsor, Sen. Dean Heller of Nevada, Sperling couldn’t come up with any: “I would say many of us have been in contact with many people.”

But the president himself – the president, I tell ya – called both Heller and the Democratic cosponsor, Jack Reed of Rhode Island, according to Sperling, “FROM HIS VACATION,” to find out how he could help.

Obama will continue this entirely-nonpolitical-only-meant-to-help-people effort in the East Room Tuesday, imploring Republicans to pass the bill. He’ll no doubt be surrounded by desperately unemployed citizens who carved some time out of their job search schedule to make it to the White House.

Even as the nation sits on the edge of a financial crisis driven by the need to incur more debt, the White House has found $300 million to send to mismanaged, financially beleaguered Detroit, according to CNN.

The money is being taken “from programs that are available for cities across the nation, not just Detroit.”

The action amounts to a backdoor assistance plan that effectively circumvents Congress, which would not support a bailout. A White House official was vague on how the money had been cobbled together.

Gene Sperling, chief economic adviser to President Obama, said the administration scrounged through the federal budget and found untapped money that “either had not flowed or had not gotten out or not directed to the top priorities for Detroit.”

How it is that there is $300 million lying around for Detroit is unclear. Sperling, who is from Michigan, is director of the White House National Economic Council but will be leaving the post January.

Though a significant sum, the money will make hardly a dent in Detroit’s $18 billion in debt. What’s more, the AP notes, “Detroit has had a poor record in making sure grant money is used properly and even spent at all.”

Sperling, Attorney General Eric Holder, Transportation Secretary Anthony Foxx and HUD Secretary Shaun Donovan are meeting with state and local officials today to discuss the funding.

President Obama almost certainly missed his chance to strike a “grand bargain” with Republicans on the deficit, particularly after having taken taxes out of the mix by raising them by $600 billion unilaterally at the beginning of the year, according to Politico.

Republicans, according to the piece, are serious when they say they are finished hiking taxes. And that puts Obama, despite his sudden charm explosion, in a serious bind.

From the article:

Obama would have to persuade Republicans to vote for a tax increase for the second time in less than one year. Can you imagine Boehner and his troops heading into the 2014 midterm elections dominated by conservative activists having to explain, not one, but two increases?

They ate $600 billion in defense cuts that a majority of Republicans wish they could undo rather than discuss even a tiny tax increase. Hard to see them budging now . . .

“Nobody is even talking about a grand bargain,” one of the Senate’s most influential Democratic leadership aides told us. “It is not even on our radar right now.” An adviser to Speaker John Boehner told us that window was slammed shut by Obama’s hardball tactics since the tax hike. “He missed the chance.”

I think the analysis is correct. Republicans who raise taxes again will be welcoming primary challenges all over the nation. And the White House has already socked them with two hits – tax increases and defense cuts. Obama will learn that you can hit someone over the head and apologize only so many times.

This is why Gene Sperling was busy screaming at Bob Woodward. Because he knows Woodward’s contention – that Obama moved the goalposts by trying include tax increases as a substitute for the sequester, which is all about spending cuts – does bodily damage to the president’s effort to extract more revenues from Republicans.

Sperling was likely engaged in a typical White House tactic – bully reporters to erase reporting that isn’t helpful to Obama. But as Politico notes, Republicans already get it.

Bob Woodward appears to either be mistaken or to have exaggerated when he claimed that a senior White House official – who turns out to have been White House National Economic Council Director Gene Sperling – threatened him in response to Woodward’s statements about the White House handling of the sequester.

With the release of the complete emails today by Politico, it is clear that Sperling was most likely suggesting to Woodward that as a policy matter he is wrong, and that he would for this reason “regret” saying that the White House had “moved the goalposts” by seeking tax increases to replace the sequester.

This doesn’t mitigate the fact that the White House routinely bullies the press in order to suppress speech in a systematic way that is light years beyond what any previous White House I’ve covered has done. This is not, as White House Press Secretary Jay Carney tried to suggest today, an strong airing of differences of opinion. It is a preconceived attempt to alter reporting that the White House in many cases knows is perfectly legitimate and an effort to intimidate reporters into not doing their job with tough journalism the next time around.

But unless there is more context that I’m not aware of, there does not appear to be a threat implied by Sperling.

Below is the text of the emails:

From Gene Sperling to Bob Woodward on Feb. 22, 2013

Bob:

I apologize for raising my voice in our conversation today. My bad. I do understand your problems with a couple of our statements in the fall — but feel on the other hand that you focus on a few specific trees that gives a very wrong perception of the forest. But perhaps we will just not see eye to eye here.

But I do truly believe you should rethink your comment about saying saying that Potus asking for revenues is moving the goal post. I know you may not believe this, but as a friend, I think you will regret staking out that claim. The idea that the sequester was to force both sides to go back to try at a big or grand barain with a mix of entitlements and revenues (even if there were serious disagreements on composition) was part of the DNA of the thing from the start. It was an accepted part of the understanding — from the start. Really. It was assumed by the Rs on the Supercommittee that came right after: it was assumed in the November-December 2012 negotiations. There may have been big disagreements over rates and ratios — but that it was supposed to be replaced by entitlements and revenues of some form is not controversial. (Indeed, the discretionary savings amount from the Boehner-Obama negotiations were locked in in BCA: the sequester was just designed to force all back to table on entitlements and revenues.)

I agree there are more than one side to our first disagreement, but again think this latter issue is diffferent. Not out to argue and argue on this latter point. Just my sincere advice. Your call obviously.

My apologies again for raising my voice on the call with you. Feel bad about that and truly apologize.

Gene

From Woodward to Sperling on Feb. 23, 2013

Gene: You do not ever have to apologize to me. You get wound up because you are making your points and you believe them. This is all part of a serious discussion. I for one welcome a little heat; there should more given the importance. I also welcome your personal advice. I am listening. I know you lived all this. My partial advantage is that I talked extensively with all involved. I am traveling and will try to reach you after 3 pm today. Best, Bob

Sperling’s apologies may or may not be sincere. Half an hour of screaming seems like a standard White House tactic to get journalists to change their story.

But Sperling, were he threatening Woodward, would probably not have been so incredibly subtle. And Woodward’s response is hardly the outraged protest of someone who thinks he is in danger of retribution.

Buzzfeed’s Ben Smith is reporting that a “source familiar with the exchange” said National Economic Council Director Gene Sperling is the senior White House official who berated Bob Woodward for half an hour and then threatened him in an email over his reporting on the sequester.

Sperling is a veteran Democratic official who held the same position as NEC Director in the Clinton White House. He’s part political operative and part economist, and if he is indeed the one who bullied Woodward, it wouldn’t be surprising because he is directly involved in both the sequester and the politics of the issue.

Suddenly, Right Teleprompter wasn’t delivering the correct words anymore. All Obama could see were the lyrics to Van Halen songs. That couldn’t be right! He paused, not knowing what to do.

After a few seconds, the president became confused and started spouting weird gibberish, like Rick Perry.

Valerie Jarrett got herself a good laugh out of it.

The lighting guy really couldn’t care less. Just as long as the light was good. He got a kick out of climbing up his ladder and saying, “Let there be light.”

Watching back in his office, Boehner had his usual reaction.

Then, Obama looked and realized Left Teleprompter had the speech. He began again to speak confidently.

Later, briefing reporters, Tim Geithner suddenly realized the American Jobs Act wouldn’t create any jobs at all. But how could he tell everyone?

Jack Lew frowned, knowing something was terribly wrong.

White House Press Secretary Jay Carney, understanding that Geithner had finally run the numbers through his head, knew he had to prevent him from speaking. He gave the Treasury Secretary his Vulcan Sleeping Stare.

The stare immediately put Geithner to sleep.

Lew, not realizing what was happening, began singing loudly to Geithner to awaken him.

Geithner suddenly awoke, startled and unsure, but remembering nothing about the funny numbers.

He reported that the American Jobs Act would indeed succeed, and everyone who is out of a job began to cheer.

President Obama today, as expected, installed Gene Sperling right back where he worked under Bill Clinton, as head of the National Economic Council in the White House.

Here’s what Obama said. Part of it is true, part of it is debatable.

One of the reasons I’ve selected Gene is he’s done this before. This is his second tour of duty heading up the NEC, and in his tenure in the Clinton administration during the late ‘90s, he helped formulate the policies that contributed to turning deficits to surpluses and a time of prosperity and progress for American families in a sustained way. Few people bring the level of intelligence and sheer work ethic that Gene brings to every assignment he’s ever taken . . . So, Gene, we are lucky to have you back at the NEC.

Let’s start with what’s debatable. I’ve never been exactly sure how it is that Sperling and the other Clintonites got themselves branded deficit hawks and surplus makers.

Clinton never really got us to surplus. There was only a “surplus” if you count the money the government was robbing – and robbed under Bush as well and robs today – from the Social Security Trust Fund.

And Clinton increased spending every year he was in office, particularly on cherished social programs, while gutting the defense department with a “peace dividend” to keep the numbers from getting too high. Only we discovered there was no peace.

The final increase in spending, in 2000, was the biggest of all.

The decline in the deficit was largely a result of increasing tax revenues resulting from the expansion that began in 1992 under George H.W. Bush and that was abetted by the extraordinary tech bubble which, when it burst, caused the Clinton recession, which began as Bush took office.

So Sperling’s contribution to “prosperity” is debatable.

Sperling (left, front) in the Rose Garden listending to Obama last September. Valerie Jarrett is at right. photo by Keith Koffler

What Sperling was really good at was avoiding GOP tax cuts, which he fought relentlessly as the White House point man on the issue and which he will be called upon to scuttle once again.

And he was spellbound by the little boutique programs the Clinton policy shops devised and planted into the budget – where they could grow and grow year after year.

I can remember one briefing he and then-Education Secretary Richard Riley held at the White House, discussing some initiative or another – let’s call it “The Happy Kids Healthy Milk Program.” That’s what they loved to call these things – I mean, who could oppose milk for children?

After the session, I wandered behind the briefing room into the halls of the West Wing, where Sperling and Riley were jabbering about their performance. As I quietly strolled by, I figured I’d hear them towel whipping a bit – “you hit that question out of the park,” or something like that.

Not Gene. The two of them were standing there with dreadfully earnest looks on their faces, Sperling murmuring, “The Happy Kids Healthy Milk Program is a really wonderful initiative, it’s going to make a significant difference in the amount of milk kids drink.”

Oh, they took themselves very seriously, these people.

Which brings us to what’s true about what Obama said – Sperling’s “sheer work ethic.” Fueled by an intravenous line dripping Diet Coke, Sperling works nonstop, has no life, and will pursue Obama’s agenda with a grim sense of mission.

“Gene, we are lucky to have you back at the NEC.” That’s also correct.

The latest murmurings about White House staff changes point to the continuation of President Obama’s move to the center, dictated by a desire to be reelected amid popular discontent with the sharp leftward turn of his first two years. Obama is considering William Daley, brother of the departing Chicago Mayor Richard Daley, to be chief… Continue Reading

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